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In this article on “What is No Cost Financing” I will explain the basics about no cost financing. But, before I go to what no cost fi

According to USFDA, a combination product is one composed of any combination of a drug and device; biological product and device; drug and biological product

nancing is, many would like to know “what is financing” in general. For those of the little who do not know what financing is, please

; or drug, device, and biological product and fixed dose combination would include two or more combinations of drug.

Examples of combination products may in

read on.

Financing covers any debt borrowed against any immovable property, movable property, intellectual property, or any thing th

lude drug-coated devices, drugs packaged with delivery devices in medical kits, and drugs and devices packaged separately but intended to be used together.

at can guarantee the return of money borrowed. This would generally cover mortgage, and other similar loans taken.

The party who wou

here is enormous increase in the number of combination products entering the market in the recent years. Combination products have proven advantages but fixe

ld give you the money would be the lender or otherwise called the financier. Now, once you have come to an agreement with the financ

d dose combinations are still in the process of convincing regulatory authority on their advantages over the single ingredient formulations.

Combination pro

ier, it needs to be put down on paper.

This putting down on paper would include activities like title insurance, fees for recording,

ucts have become life saving products for the pharmaceutical companies who doesn’t have many innovative molecules in their product pipeline and have been inc

escrow fees, processing fees, underwriting fees, cost of loan documents and so forth. All this is going to cost a small bundle and th

easingly used in the product life cycle management. Even the companies having product patents are trying to extend their product life cycle through the combi

is if waived off is called no cost financing.

Now the next practical question comes, is no cost financing possible? The answer is a

nation products and maximize the revenues. But the companies involved in this practice are overlooking that they are burdening the patients both economically

big YES. The financiers give you no cost financing. This is made possible only with yield spread. It is also called as lenders reba

and physically. They need to rightly judge the benefits of the combination products and they have to even look at the risks involved when combining the produ

te.

What is this lenders rebate or so called yield spread? I will demonstrate this with a small example. First let me tell you that

ts. Some of the combination products were well accepted by physicians while others suffered. Companies involved in development of combination products are fi

all figures in this example do not represent any rate of interest provided by any financier or for any particular period.

Let us imag

ding difficulty in defining their combination products and facing various challenges from selecting a combination to marketing it.

Following aspects would a

ine that there are a number of lenders like some commercial banks, mortgage companies or mutual banks. You being the loan originator

dd to the challenges in developing combination products:

Which markets to tap where the combination products can do fairly well?
Which combination prod

approach the banks with an application for a loan.

Now these bodies are giving out loans at a rate called the wholesale value interes

cts are meaningful and rational?
Which therapeutic categories to select?
Which Combinations can address unmet needs of the patients?
Do combin

t rate. Now on your loan application you are offering an interest rate which is higher than the whole sale value interest rate for yo

tions increase the patient compliance?
What would be the developing cost?
How to tackle the risks encountered during combination product developmen

ur own purposes.

Now this being the case, the lender pays you a fee which is called the yield spread, or you are entitled to a rebate

t?

As combination products don't fit into the traditional categories of drugs, medical devices, or biological products, the USFDA is in the process of devel

. This will be the case if the demand is more than the supply.

If you take a loan at the rate of 5.125 %, then you are under a lock

ping new procedures for reviewing their safety, efficacy and quality.

Professional from academic institutions, pharmaceutical industries, health care indust

in period. Let us imagine that the lock in period is for 15 days. For this rate you will not be entitled to a rebate. But, if you ar

y and representatives from various regulatory agencies are working out to design the regulatory requirements for manufacture and sale of combination products

e applying for a higher interest rate of say 6 %, then you will not be required to pay for your own closing costs. This will be the c

.

As there is an increasing trend of the combination products companies manufacturing such products should be able to tackle the problems involved in the de

ase if you are under a lock in period of 30 days. This will be making the loan a bit more expensive as you will be paying the differe

elopment. They need to be wiser in analyzing the market trends and the regulatory requirements.

Companies that provide selfless information through particip

nces for a period of another 30 days.

I hope this article has given you a clear idea as to what is no cost financing and how it works

tion in industry events and feedback to regulatory authorities would be able to face the challenges and will be successful in developing combination products

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